MWANA Africa has warned that short-term production volumes would be negatively affected following a leach tank incident at its Freda Rebecca gold mine, sending its shares more than 5% lower.

The company added that the incident would affect gold recovery in the medium term.

The incident occurred when one of the leach tanks ruptured and collapsed onto a second, neighbouring tank, causing structural damage to the two tanks and a discharge of leach tank contents onto the ground surrounding the leach tanks beyond the bunded containment area.

However, the company stressed plant processing operations had been suspended and containment and restoration work had already commenced.

"Mwana management, the local community and government agencies are co-operating in clean-up operations," the company stated, explaining that the Freda Rebecca incident response team was immediately mobilised under the guidance and control of general manager Toindepi Muganyi.

It added: "The Mine Inspectorate and the Environmental Management Authority have been informed and permission has been received to commence site restoration.

Work is focused on making the area safe and assessing damage caused and implementing work to resume operations."

Chief executive Kalaa Mpinga also reassured investors, commenting: “Our absolute priority is the health and safety of our employees at Freda Rebecca and that of local community members.

"We will put in place the appropriate measures to contain any impact on the affected area as soon as possible while investigating the cause of the collapse to prevent any future reoccurrence."

The company expected the clean-up would take five days, after which it would need authority to restart the plant, which may take some time.

"This is an obviously a big blow to the company which has done so well over the past six months," said analysts at broker FoxDavies.

"Any concern over environmental credibility in the wake of this incident may impact the company's proposed tailings reprocessing, for which a pilot plant is due to be commissioned in the third quarter of 2013."